Rising prices limit access to food for poor households

Despite seasonal improvements, the high inflation rates reported throughout the region is negatively impacting the prices of food, transportation, and services. High prices are reducing the purchasing power of poor households, resulting in their experiencing Stressed (Phase 2, IPC) outcomes through May 2022. Areas of the Dry Corridor and eastern Honduras will continue to be in Crisis (Phase 3, IPC) due to losses during the primera and postrera seasons and due to accumulated deficits related to the shocks of COVID-19 and storms Eta and Iota.

General inflation in December continued to rise, with a year-on-year increase in the Consumer Price Index of 6.1, 5.3, and 7.2 percent in El Salvador, Honduras, and Nicaragua, respectively. However, the increases in food prices in El Salvador and Nicaragua were even higher – 8.0 and 12.8 percent, respectively. These prices imply pressure on household budgets and limit access to food for poor households.

Wholesale prices of white maize remained stable in El Salvador and Honduras, during December as compared to the previous month, while a slight increase was reported in Nicaragua. In the case of red beans, wholesale prices are stable in El Salvador and saw increases of 17.7 and 25.3 percent in Honduras and Nicaragua, respectively, over the same period. However, when compared to December 2020, the prices of both products show strong variations in the three countries. In general, the increases in the prices of staple grains are driven by the losses reported during both harvests of 2021 and the reduction in cropped areas, as well as higher costs of agricultural inputs and fuel.

Sources of income in rural areas are about to reach their annual maximum with the peak of the harvest of several commercial crops, which require many day laborers. In urban areas, January will still bring a boost to the economy, thanks to some seasonal activity, although to a lesser extent than in December. However, the new wave of COVID-19 cases currently being reported will somewhat reduce work activity, as some workers become ill.

Despite rainfall accumulations with a deficit of up to 40 percent over northern Nicaragua, the forecast for the next three months indicates rainfall accumulations close to the average for the entire region. This forecast will favor the development of crops during the apante/postrera tardía cycle, which ends in March.